Betting Big on HD-to-Ultra HDTV Transition

Will the Christmas buying season starting on Black Friday this year be the start of HDTV's transition to Ultra HD? That's what Nanotech Entertainment Inc. in San Jose, Calif,. is betting big on happening.

Will the Christmas buying season starting on Black Friday this year be the start of HDTV's transition to Ultra HD?

That's what Aaron Taylor, executive vice president of sales and marketing at Nanotech Entertainment Inc. in San Jose, Calif., contends and his company is betting big on it happening.

What are the signs that point to Taylor being right in his prediction? "One precursor was the Consumer Electronics Show in January this year where all the major Korean, Japanese, and Chinese television manufacturers were hawking their Ultra HD offerings," says Taylor. "4K (Ultra HD) clearly took center stage at CES 2014."

Furthermore, he contends, Chinese manufacturers bombed the price and made the sets affordable to the mass consumer market.

Will a large supply and lowering price be sufficient for consumers to buy Ultra HD?

To answer the question this discussion will examine the market data, view the consumer sentiment toward Ultra HD, test the thinking of content suppliers and pay TV service providers, and peek at the plans being drawn up by over-the-top (OTT) content suppliers to offer Ultra HD content.

OTT content providers see this as a major opportunity to offer premium content to consumers that will build brand and take viewers away from cable, satellite and over the air broadcast content providers.

A place to start this investigation on is the National Association of Broadcasters (NAB) Convention in Las Vegas.

In the US last year 55,000 units shipped and the research predicted 481,000 this year, tripling to over 1.2 million in 2015 and doubling to 2.8 million units in 2017.

One consensus of the panel is that the analysts' estimates have been changing upward over time. On August 10, 2014, for example, Digitimes predicted worldwide Ultra HD unit shipments of 68.2 million in 2017 up from 1.5 million units shipped globally last year and over double the expected shipments of 30 million in 2015.

China to bring down cost The disparity between global and US projections was explained by NAB panelist Brian Markwalter senior vice president of research and standard of the Consumer Electronics Association (CEA), who stated that large numbers of Ultra HD TVs were being shipped into China.

This conclusion was supported by the Digitimes report, Ultra HD "technology, on the other hand, is being driven by panel makers in mainstream markets by a multitude of vendors, with the China market taking the lead." Aaron Taylor is of the same mind, adding, "Chinese TV vendors HiSense, TCL, and Seiki, have all made a tremendous push on Ultra HD."

The Chinese brands, namely Seiki, came into the market and brought the price down much faster than Korean and Japanese manufacturers wanted. This forced everyone to drop their price to remain competitive. Where before the sets were running around $5,000, now from Samsung, LG, or Sony a 65-inch Ultra HD TV can be had for around $2,000. The Chinese are offering 65-inch Ultra HD TVs at around $1,500. That has helped consumers especially those in China embrace Ultra HD.

While the equipment manufacturers are building Ultra HD, is there any guarantee consumers will purchase them in the quantities needed to achieve the forecasted unit volumes?

A Strategy Analytics' ConsumerMetrix Service survey of 4,095 Europeans and 2,024 US consumers, found over 50% of those who participated said they would likely buy Ultra HD in the next two years. The survey also found that the intention to buy Ultra HDTV peaks in the 25 to 34 age group and the awareness of Ultra HD was greater among higher income consumers, two third of which express an intention to buy this next generation television.

The research suggests that TV manufacturers planning to produce large numbers of Ultra HD sets in 2014 should see strong product acceptance during the Christmas buying season. The only remaining question is what Ultra HD content will be available for consumers to view once they bring the sets home?

@Loek: i couldn't agree more. With companies churning out UHD TVs, the source of UHD is still not determined, since most broadcast companies do not have UHD capable recording devices. One thing more, UHD TV's have to come with great surround sound, because buying a costly UHD TV only to buy another stereo system for 3D surround sound is deal breaking.

Television set manufacturers are faced with the reality that HDTV sales has peaked and is no longer growing. They've seen in Ultra HD a means of getting consumers to begin a new buying cycle replacing HD with Ultra HD. To convince consumers to make this transition has required set makers to get content owners to make Ultra HD content available. This is borne out by recent reports from market research firms. In a recent comment in UHD/4K Reporter: Issue 091 "Weekly Reports from the UHD front" (http://riderresearch.com/current-reports/):

"UHD set makers are vigorously looking for more quality UHD content. ABI Research's practice director Sam Rosen said Samsung and Sony are doing everything in their power to seed the market with 4K content and services in order to convince consumers to purchase higher priced and higher margin 4K TV sets. Sony, with its motion picture division, is in a good position and has released a significant amount of remastered content on a download-based movie player. Meanwhile, Samsung, in a similar fashion, offered early adopters a free USB HDD with two full-length 4K videos and additional 4K clips, he said."

This relationship between content suppliers and television set makers is symbiotic in that content suppliers can offer their content (video of demand with a fee) directly to the consumer via an App on the Smart TV. The set maker makes out because he gets a portion of the revenue the consumer pays the content supplier. In this sense, the television set maker could make more from revenue sharing than from selling the tv. Expect to see more of this happening as Ultra HD TV sets begin shipping in September ahead of the Chrismas buying season.

Whilst many shows shoot 4K the majority post in 2K and the majority of HD content broadcast is less than 2K. Nearly all repeats are SD from past catalogues and modern TVs dont actually display this material very well as their resolution is biased towards HD or in the case of Ultra HD 4K.

Utopia exists in the minds of TV set manufacturers but in reality Ultra HD in practical terms is some way off. As to NHK and Super HD (8K) we cannot handle multi-channel 2K very well so 8K has no chance.

Here in the Netherlands broadcasters are still writing off their investiments in SD studio and camera equipment, even worse Dutch national TV has only one HD-capable studio and can only service one HD broadcast at a time.

Movies, sports are in HD, but taped broadcasts and most live stuff is still in glorious SD. This is a big difference with the US. Appearently production companies still charge a premium for a HD production. Personally, make no sense to me.. given the fact that the consumer market has completely switched to HD.

I wish manufacturers good luck with UHD sets. Likely, production costs for UHD sets will drop down so fast that it doesn't make sense to manufacture HD sets anymore. However, I'm afraid we will be watching upscaled HD content or possibly even SD stuff for quite some time to come....